South Africa — South African consumer confidence has suffered a dramatic reversal, hitting a 15-month low as the latest FNB/BER Consumer Confidence Index records a severe drop to -19 points for the second quarter of 2026. This steep decline from the -7 points seen in the first quarter highlights how the economic shockwaves of the Gulf conflict and surging petrol costs are rapidly eroding household financial optimism.
The Geopolitical Catalyst and Big-Ticket Pullback
The primary trigger for this pessimistic shift is the ongoing war in the Gulf region, specifically involving Iran. The geopolitical instability has triggered a cascade of negative economic effects, most notably a sharp spike in petrol prices, significant disruptions to travel, and heavy losses on stock markets.
Consequently, optimism regarding the broader economic outlook has plummeted. This bleak sentiment is directly translating into reduced spending, with a significantly smaller portion of the public believing it is a favorable time to purchase big-ticket items like furniture, vehicles, and household appliances.
Expert Insight and the Affluent Consumer Shift
Mamello Matikinca-Ngwenya, FNB chief economist, explains that the results highlight a complete turnaround in how citizens perceive their personal wealth. Previously optimistic, higher-income households are now deeply concerned about the economic trajectory over the next 12 months and view their personal financial positions as having deteriorated considerably.
This behavioral shift aligns perfectly with the first-quarter 2026 GDP data, which already indicated that consumer activity was beginning to slow. Matikinca-Ngwenya notes that this latest plunge in sentiment strongly suggests this economic moderation will persist well into the second quarter.
The Income Divide: Petrol, Food, and the JSE
The economic squeeze is manifesting differently across various income brackets. Lower-income households are primarily battling food inflation, rising fuel costs, and an economy failing to generate adequate employment. While they rely more heavily on public transportation, they remain highly vulnerable to basic cost-of-living increases.
Conversely, affluent earners are experiencing a distinct type of financial pain. Because they utilize private vehicles more frequently, they feel the direct impact of elevated petrol prices. Furthermore, the underperformance of the JSE is actively shrinking their household balance sheets, compounding their financial anxiety.
Monetary Policy, Rate Hikes, and the Oil Pause
Compounding the pressure on wallets is the stance of the central bank. The Monetary Policy Committee (MPC) recently implemented a 25 basis point interest rate hike, and current market pricing indicates that analysts expect at least one additional rate increase this year.
There has been a temporary pause in the US-Iran conflict, which caused oil prices to retreat. However, Matikinca-Ngwenya cautions that the market may have overreacted to this positive development. The timeline for rebuilding global oil supplies remains highly uncertain, keeping energy risks alive. As a result, the central bank is closely monitoring inflation expectations and watching for “second-round effects” as the year progresses.
Inflation Forecasts and the Path to Recovery
Looking at the broader macroeconomic picture, FNB forecasts that inflation will reach its peak next year. Currently sitting above the central bank’s targeted 3% mark, persistent inflation continues to erode real disposable income. While food inflation has remained relatively moderate throughout 2026, adverse weather-related patterns pose a significant upside risk that could drive food prices higher in 2027.
For consumer confidence to recover, Matikinca-Ngwenya emphasizes that the economy must demonstrate job creation and employment gains. If the labor market remains weak amidst high inflation and further rate hikes, sentiment will stay depressed. Ultimately, FNB projects that overall consumer activity will remain weaker in 2026 compared to last year, with a meaningful improvement only anticipated in the second half of 2027.